8:15 AM, 7 September 2017

Record high for steel consumption but missing data could point to higher actual use

Overall, our FY 2017 (Jul16 - Jun17) heavy steel consumption reached just over 173,000 tonnes - 1.4% higher than last year and a new record in our steel statistics.

This is a welcome outcome, supported by a buoyant steel construction sector in response to growing demand for seismic strengthened buildings and an expanding population in major regional centers.

However it was not the growth rate some would have expected and likely the contribution from fabricated welded steelwork imports made up for this gap in the expectation.

The numbers
Plate was up 1.03% to 74,487 tonnes, sections by 1.16% to 86,353 tonnes and RHS by 0.9% to 12,174 tonnes compared to FY2016. This is evenly spread and demonstrates that it is not just growth in sections fueled by the steel construction sector which is going well but likely also general heavy steel based manufacturing.

 

In June, our heavy steel volumes stayed steady, indicating annual usage of 173,000 tonnes of heavy steel plate and sections.

Steel volume has been linked to the Import Value (CIF-Cost Insurance Freight) Index, where the CIF index percentage correlates back to January 2000 where the value of the index was set at 100%.

Price of steel
The price index in June 2017 was 118% points - showing landed steel costs has risen in the last 16 years by 18% points only. This is remarkable considering that the comparative NZ CPI adjustment over the same period was a whopping 130%.

So in relative terms steel has remained immensely cost competitive especially since the continuous reduction in prices due to world-wide oversupply and aggressive Chinese steel price setting.

However there was a recent upward price adjustment. When looking in more detail it can be seen the value of landed steel has increased by 17 percentage points over the last 13 months alone. A slight come back in April correcting the rather steep increase experienced over the previous three months.

However as local and international steel price commentators have us believe, we need to accept a strengthening in our steel prices.